Date: February 27, 2007
Source: Waste Industries USA, Inc.
- 2006 earnings per share from continuing operations up 47%
- Operating income increases 40% on revenue growth of 7%
- Operating margins expand 280 basis points
Waste Industries USA, Inc. (Nasdaq: WWIN), a regional, non-hazardous solid waste services company, today reported preliminary financial results for the fourth quarter and full year ended December 31, 2006.
For the quarter ended December 31, 2006, revenue increased 1.9% to $81.1 million, compared to $79.6 million for the quarter ended December 31, 2005. Operating income for the fourth quarter 2006 increased 32.9% to $12.0 million, compared to $9.0 million for the same period in 2005. Income from continuing operations for the fourth quarter 2006 was $5.2 million, or $0.37 per diluted share, a 32.5% increase from income from continuing operations of $3.9 million, or $0.29 per share, for the fourth quarter of 2005. Net income for the fourth quarter was $5.4 million, or $0.38 per diluted share, a 35.9% increase from net income of $4.0 million, or $0.29 per share, for the fourth quarter of 2005.
For the twelve months ended December 31, 2006, revenue increased 7.4% to $327.5 million, compared to $305.1 million for the same period in 2005. Operating income increased 40.1% to $40.4 million, compared to $28.8 million for the twelve months ended December 31, 2005. Income from continuing operations was $17.0 million, or $1.21 per diluted share, a 47.1% increase from income from continuing operations of $11.6 million, or $0.84 per diluted share, for the twelve months ended December 31, 2005. Income from discontinued operations (net of income taxes) was $2.3 million, or $0.16 per diluted share, for the twelve months ended December 31, 2006, compared to $0.6 million, or $0.04 per diluted share, for the same period in 2005. Net income for the twelve months ended December 31, 2006 was $19.3 million, or $1.37 per diluted share, a 58.2% increase from net income of $12.2 million, or $0.88 per diluted share, for the twelve months ended December 31, 2005.
Jim W. Perry, President and CEO of the Company, stated, "We are very pleased with our operating and financial results for the 4th Quarter and for 2006. The results we achieved reflect positive pricing fundamentals within the industry and our continued focus on internalizing a greater volume of the waste we collect into our landfills. Our goal is to continue to improve our operating margins by leveraging our asset base and overhead structure as we seek to add more customers along existing routes. We believe our network of hauling operations, transfer stations and landfills located in strategic markets in six southeastern states are well positioned to benefit from projected population and economic growth in 2007." Waste Industries also provided its outlook for 2007. The Company's outlook excludes the impact of any additional acquisitions. The outlook provided below is forward-looking, and actual results may differ materially depending on various risks and uncertainties, including those detailed at the end of this release and in our periodic SEC filings.
-- Revenue is estimated in a range of $335 million to $337 million.
This assumes internal growth in a range between 2.5% and 3.0%,
excluding the impact of commodities. Growth is primarily from
price, with relatively flat volume.
-- Selling, general and administrative expense is estimated at 13.4% to
13.6% of revenue, subject to quarterly fluctuations.
-- Depreciation and amortization is estimated at 10.0% to 10.2% of
revenue, subject to quarterly fluctuations.
-- Operating income is estimated at 12.5% to 13.0% of revenue, subject
to quarterly fluctuations.
-- Net interest expense is estimated at approximately $10.5 to $10.8
million.
-- Effective income tax rate is expected to be 39.3%, subject to
quarterly fluctuations.
-- Net cash provided by operating activities is estimated to be
approximately 15% of revenue, subject to quarterly fluctuations.
-- Capital expenditures are estimated to be approximately $39 million,
of which approximately $12 million relates to the construction
of and equipment for the operation of the proposed Wake County, NC
landfill.
The Company will host a conference call to discuss its fourth quarter results on February 28, 2007 at 2:00 PM (Eastern Time). The call number is (800) 310-7032 and the confirmation number is 1018645. The conference call will also be broadcast live over the Internet at www.wasteindustries.com under the "Investor Relations" tab. A replay of the call will be available through March 14, 2007 and may be accessed by calling (888) 203-1112 and using confirmation number 1018645.
Waste Industries USA, Inc. is a vertically integrated solid waste services company that provides collection, transfer, disposal and recycling services to commercial, industrial and residential customer locations in the states of North Carolina, South Carolina, Virginia, Tennessee, Mississippi and Georgia.
WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2006 2005 2006
Revenues:
Service revenues $79,421 $80,761 $304,466 $326,447
Equipment sales 180 358 641 1,098
Total revenues 79,601 81,119 305,107 327,545
Operating costs and expenses:
Operating (exclusive of
depreciation and
amortization shown below) 52,096 50,261 204,990 212,171
Cost of equipment sales 97 234 384 666
Selling, general and
administrative 11,203 10,712 42,208 43,167
Depreciation and
amortization 8,123 8,233 29,908 32,093
Gain on sale of property
and equipment and other
assets (927) (500) (1,374) (1,189)
Impairment of property and
equipment and other assets -- 208 143 223
Total operating costs
and expenses 70,592 69,148 276,259 287,131
Operating income 9,009 11,971 28,848 40,414
Interest expense 2,438 2,321 9,833 9,608
Interest income (35) (49) (95) (181)
Other (40) (192) (232) (418)
Total other expense, net 2,363 2,080 9,506 9,009
Income from continuing
operations before income
taxes 6,646 9,891 19,342 31,405
Income tax expense 2,700 4,662 7,792 14,416
Income from continuing
operations 3,946 5,229 11,550 16,989
Discontinued operations:
Income from discontinued
operations, net of income
taxes 10 147 639 2,292
Net income $3,956 $5,376 $12,189 $19,281
Earnings per share:
Basic:
Income from continuing
operations $0.29 $0.38 $0.85 $1.22
Income from discontinued
operations -- 0.01 0.04 0.17
Net income $0.29 $0.39 $0.89 $1.39
Diluted:
Income from continuing
operations $0.29 $0.37 $0.84 $1.21
Income from discontinued
operations -- 0.01 0.04 0.16
Net income $0.29 $0.38 $0.88 $1.37
Weighted-Average Number Of
Shares Outstanding:
Basic 13,723 13,942 13,661 13,871
Diluted 13,871 14,136 13,821 14,043
WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
December 31, December 31,
2005 2006
ASSETS
Current assets:
Cash and cash equivalents $1,575 $1,656
Receivables, net 36,193 36,408
Other 4,120 5,013
Total current assets 41,888 43,077
Property and equipment, net 216,390 218,039
Intangible assets, net 105,924 104,950
Other noncurrent assets 3,953 4,213
Total assets $368,155 $370,279
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of
long-term debt 10,733 7,143
Accounts payable - trade 16,579 13,318
Other accrued liabilities
and deferred revenues 29,223 22,725
Total current
liabilities 56,535 43,186
Long-term debt, net of
current maturities 155,212 150,069
Other liabilities 26,909 31,153
Total liabilities 238,656 224,408
Shareholders' equity: 129,499 145,871
Total liabilities and
shareholders' equity $368,155 $370,279
WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Twelve Months Ended
December 31,
2005 2006
Operating Activities:
Net income $12,189 $19,281
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 30,720 32,220
Landfill accretion expense 414 824
Amortization of debt issuance costs 967 513
Impairment of property and
equipment and other assets 143 223
Gain on sale of property and
equipment and other assets (1,374) (1,189)
Gain on sale of discontinued
collection and disposal
operations (184) (2,282)
Stock compensation expense 79 612
Provision for deferred income taxes 332 2,381
Change in fair value of
commodity hedges -- 644
Provision for doubtful accounts 2,091 1,557
Changes in assets and liabilities,
net of effects from acquisition and
disposition of related businesses 993 (9,718)
Net cash provided by
operating activities 46,370 45,066
Investing Activities:
Acquisitions of related business,
net of cash acquired (31,937) (6,190)
Purchases of property and equipment (34,264) (41,154)
Proceeds from sale of collection
and disposal operations 7,988 16,354
Proceeds from sale of property and
equipment and other assets 3,415 2,209
Other (182) (907)
Net cash used in investing
activities (54,980) (29,688)
Financing Activities:
Proceeds from issuance of long-term
debt 47,697 44,000
Principal payments of long-term
debt (38,416) (55,245)
Payment of dividends (3,289) (5,283)
Principal payments of capital lease
obligations (212) (441)
Debt issuance costs (68) (579)
Excess tax benefit from stock
option exercises -- 346
Net proceeds from exercise of stock
options 2,028 1,905
Net cash (used in) provided by
financing activities 7,740 (15,297)
Decrease in cash and cash
equivalents (870) 81
Cash and cash equivalents,
beginning of period 2,445 1,575
Cash and cash equivalents, end of
period $1,575 $1,656
Supplemental disclosures of cash flow
information:
Cash paid for interest $9,517 $10,010
Cash paid for taxes $3,863 $18,383
EARNINGS RELEASE - SUPPLEMENTAL DATA (dollars in thousands)
YEAR ENDED
REVENUE MARGINS 12/31/05 12/31/06
Operating expenses including cost of
equipment sales 67.3% 65.0%
S G & A 13.8% 13.2%
Depreciation and amortization 9.8% 9.8%
Interest expense, (net) 3.2% 2.9%
Income from continuing operations
(pre-tax) 6.3% 9.6%
Income tax expense 2.6% 4.4%
Income from continuing operations 3.8% 5.2%
SERVICE REVENUE MIX
Collection:
Industrial $86,194 $89,933
Commercial 83,882 91,555
Residential 66,907 74,933
Disposal and transfer 44,297 46,285
Recycling service 4,820 4,719
Recycled commodity sales 4,997 3,941
Convenience sites 7,607 6,553
Other 5,762 8,528
Total Service Revenue $304,466 $326,447
OPERATING INCOME BEFORE DEPRECIATION,
AMORTIZATION AND ACCRETION*
Operating income $28,848 $40,414
Accretion 414 824
Depreciation and amortization 29,908 32,093
Operating income before
depreciation, amortization
and accretion $59,170 $73,331
CAPITAL EXPENDITURES DETAIL
Collection & Transportation $21,493 $29,432
Landfill Development 12,771 11,722
Total capital expenditures $34,264 $41,154
FREE CASH FLOW RECONCILIATION *
Net cash provided by operating
activities $46,370 $45,066
Less: Capital expenditures (34,264) (41,154)
Plus: Proceeds from disposal of assets 3,415 2,209
Free cash flow $15,521 $6,121
DEBT TO TOTAL CAPITAL 12/31/05 12/31/06
(includes capital leases) 56.3% 51.9%
TOTAL LIABILITIES TO EQUITY 1.8 1.5
DAYS SALES OUTSTANDING 34 34
SERVICE REVENUE GROWTH Q4 2006
Price 4.4%
Volume -3.6%
Energy surcharge -0.5%
Total internal growth 0.3%
Recycling commodities -0.3%
Acquisitions 1.7%
Total service revenue growth 1.7%
* Operating income before depreciation, amortization and accretion and free cash flow are considered non-GAAP financial measures. The Company defines free cash flow as cash flows from operating activities less capital expenditures plus proceeds from the sale of property and equipment and other assets. Operating income before depreciation, amortization and accretion and free cash flow do not represent, and should not be considered as, an alternative to net income or cash flows from operating, investing and financing activities, each as determined in accordance with GAAP. The Company's definitions of operating income before depreciation, amortization and accretion and free cash flow might not be comparable to similarly titled measures reported by other companies. The Company believes that the presentation of operating income before depreciation, amortization and accretion is useful to investors because it provides important information of the Company's operating performance exclusive of certain non-cash costs. The Company has included information concerning free cash flow because it believes it provides additional information for determining its ability to meet debt service requirements and that this measure is an indicator upon which the Company, its lenders and some investors assess its financial performance and its capacity to service debt. The Company therefore interprets free cash flow trends as a measure of its liquidity.
For more information, visit:
www.waste-ind.com.
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